Should You Apply for Financial Aid?


Should I Apply for Financial Aid?

Here’s a variation of a question that I always get during admission season:

Someone told me yesterday that it’s better to answer “No” to the “Do you intend to apply for need based financial aid” question on the Common Application. My son has already submitted his applications and he answered “yes” to that question as we are not sure if we would qualify for aid but we thought we should answer yes.

A friend yesterday told me that if you answer “no” that the schools put you in a different pile since they know you can pay full price and  you are more likely to get accepted.  Is there any truth to this?

As far as I’m concerned, failing to apply for financial aid will often be a mistake. Here are three reasons why:Falling dollar bills

1. Checking the box won’t hurt your chances.

If you ultimately won’t qualify for financial aid, it won’t matter if you check the box on the application that indicates that you will seek assistance.

Schools want to know if a teenager will apply for aid because the financial aid office will need to be involved with generating a financial aid package. If the school determines that your family will not qualify for need-based aid, the school will put your student in the same category as the applicants who did not request financial aid.

2. You could receive financial aid.

Parents often don’t have a good idea about whether they will qualify for financial aid, which is why it’s important to complete the financial aid forms. A student who doesn’t qualify for aid at an in-state public university, may qualify for significant help at an expensive private institution.

Here is an old post of mine over at my college blog at CBS MoneyWatch that illustrates how even families who might assume they wouldn’t qualify for aid at expensive schools can. For the post, I used Princeton’s  financial aid calculator and assumed that the parents made $300,000 in income had two children in college. In this scenario, the Princeton student would have been eligible for nearly $26,000 in need-based aid.

3. You could get into financial trouble by failing to ask for aid.

I got an email recently from a parent who wondered if they should skip the aid request for the freshman year, but make the request before the child’s sophomore year. I couldn’t find the email, but I recall that the parents had saved about $70,000 or $80,000 for college, which could cover all of the first year’s expenses at a private institution and part of the second year.

I think holding off and applying the second year would be a poor idea. What happens if you apply for aid for a child’s second year and receive a mediocre package that’s stuffed with loans? Can you imagine parents having to tell a child that he/she will have to leave for a cheaper school because they can’t afford it?

When parents need financial aid, they should apply upfront.

You’ll learn more about this issue by reading: Need-Aware versus Need-Blind Colleges

 Lynn O’Shaughnessy is the author of the second edition of The College Solution: A Guide for Everyone Looking for the Right School at the Right Price.

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  1. Hi Lynn,

    Does applying for financial aid also give the private university options to consider tuition reduction, in the form of grants and scholarships, regardless of the financial capacity of the family? ie- The family makes enough money, but the university wants the student, and will make a grant to the student to entice the student to accept the admission offer…

    1. HI David,

      At nearly all private colleges, the vast majority of students receive “merit” scholarships. In fact, 87% of students receive these scholarships. These are nothing more than an enrollment management tool. Colleges gives students they really want money, whether it’s need-based grants or merit awards, it really doesn’t matter what it’s called as long as it reduces a family’s costs.

      Lynn O’Shaughnessy

      1. My “confusion” is whether a scholarship can come via the application for financial aid, or the student gets a merit offer regardless of financial need when they get admitted. It appears that applying regardless of what you make is the best option.

        1. Merit money is given regardless of whether you apply for financial aid. You receive merit awards via the application process.

          Lynn O.

        2. David, my experience with my oldest daughter was that some schools that really wanted her threw in additional grant money, above the initial merit scholarship offer, after the FAFSA was filed, even though we should not have qualified for need-based aid. Therefore, I agree with you that applying for aid is the best option at most schools.

  2. Great points, Lynn! #2 matches my experience with my oldest daughter. We were definitely in the “probably not worth it to apply for aid” category, but listened to all the advice that said apply anyway. The higher cost schools actually offered us some extra grant or scholarship money, so we were pleasantly surprised. I love your Princeton example and in my research I have found that there are several other top-tier schools that would probably produce similar results.

    I would also remind parents that if there is any possibility your child will need to take out a loan, even a very small one, during his/her undergraduate years, file the FAFSA. That way you can apply for federal loans and stay away from private loans. If you don’t file FAFSA, your only option will be private loans. At a high priced school, even families with high incomes may qualify for some amount of subsidized Stafford loans. The good thing about the subsidized Stafford is that you don’t have to make interest payments until after graduation.